THE NUMBERS GAME -- Your Credit Score

What do you consider the most important number in your life? Your social security number? Your birth date? Your phone number? While the majority of people don’t know this number, it pretty much rules your finances --- it’s your credit score.

A credit score is used by lenders in the decision making process of “if I give Person #1 a loan or credit card, how likely is it that Person #1 will pay me back on time?” This number is also called a risk score and is actually a statistical measure of the risk that a person will be able to repay the debt as agreed.

A good credit rating is essential these days if you plan on making a major purchase, apply for a credit card, or take out a loan. If your credit rating isn’t as positive as you’d like, there are ways to improve it.

WHERE DO I GO TO FIND OUT MY SCORE?

There are three major credit reporting bureaus and you are entitled to one free report per agency, per year. And, the reported score may be a different number from one agency to the other. You also have the right to dispute any errors on the report(s). Request a written report to be sent to you:

Equifax www.equifax.com
Experian www.experian.com
TransUnion www.transunion.com

You can always call any of us at the office,at 913-642-3334 or email me at michele@wantinsight.com for additional information on credit scores.


REVIEW THE REPORT

It’s been reported that nearly 80% of all credit reports contain at least one error! So, review your report carefully. Once you’ve identified any discrepancies, they’ll need to be eliminated. A dispute form usually accompanies the credit report (or request one from the website). Fill it out and send it back as Registered Mail. Documentation of each step you take is important, so keep a “paper trail”. And note that the law states that any item that is not verified as accurate must be removed from your report.

IT’S CLEAN UP TIME

Now the mistakes are cleared up, but there are still a few blemishes that are yours. What next? Identify any debts that are still pending and make a plan for eliminating them. It takes time to clear up debt, so it’s important to start now. AND, you also have the legal right to add remarks to your file. This is an opportunity to defend yourself and also highlight the positive points in your report.

WASH & REPEAT

Consistent payments (small is fine, as long as it’s the minimum due) is key. Consistency proves you are responsible enough to repay loans as promised. Over time, that consistency outweighs the possible negatives on your report.

LOOK AGAIN

Check your credit information at least once a year to avoid any nasty surprises when you’re ready to make a major purchase.

OTHER NUMBERS

It’s good to have a few open lines of credit, none max’ed out, and no more than what you can afford to pay off on your income. Cancel old cards you don’t use any more. BUT, do not use up one huge line of credit by putting your full amount of debt on it! Credit card issuers like to see no more than 30% of your limit accessed at one time. Prove your self control by having 2-4 lines of credit with a small or even no balance on each.


For help with any of your credit related questions please call me, 913-642-3334, or email me at michele@wantinsight.com

How did we get into the mortgage crisis and how can we get out?

Many industries have played a role in getting us into this mess. Lenders expanded their guidelines so that more people could qualify for loans, even if they did not have the means to repay the loan. It meant that many Americans that once could have never afforded a home loan, would now have the American dream; temporarily anyway. Even Congress and President Bush believed that everyone should own a home and encouraged lenders to loan to lower income families. A popular saying was, if someone could breathe, they could get a loan.

Realtors, appraisers, builders, loan originators, developers, and title companies all saw this time period as an opportunity to make money. Even the home buyers thought of this as an opportunity to buy a larger house than they had ever imagined; either in hopes of reselling for a profit down the road, or just to keep up with the Jones’. Scripture 1 Timothy 6:10 says that “For the love of money is the root of all kinds of evil”. Many people wandered from their true faith and brought on hardship. Email michele@wantinsight.com for more InSight.

There was a sequence of events that contributed to the time line of these market changes. Some believe it started with the Twin Towers collapse on September 11, 2001. Shortly after, the federal government cut taxes and sent rebates to Americans, encouraging the American people to spend more, in order to fight terrorism. Alan Greenspan cut the discount rate to 1 percent and announced that adjustable rate mortgages were a positive choice. Mortgage companies and lenders threw themselves into creative finanancing. They created ARMs, Option ARMs, 100% financing loans, teaser rate loans, no-doc loans, , and negative amortization loans. The availability of new loans created an immediate demand in housing; upgrading into larger homes and buying new construction. The value of homes started to increase rapidly which led to investors speculating and flipping homes with plans to immediately resell for a profit. This value increase also led to many Americans taking the equity out of their homes with second mortgages in order to spend the money on unnecessary possessions. No wonder we are in such a mess! Visit our website www.wantinsight.com for more information.

The government has stepped in once again, and will hopefully ease the housing and credit crisis, by lowering mortgage rates and allowing greater availability of credit for consumers. Lending standards will not ease though. Fannie Mae and Freddie Mac will keep a close eye on underwriting practices, and fees for borrowers with weaker credit histories will remain in effect. Their primary goal is to increase the availability of mortgage finance while remaining proactive in the processes. Fannie and Freddie are crucial to the turn-around.

The consequences of this market will be seen for years to come. What is the good that will come from all of this? Now is the time to really teach and equip the Church and others financial and biblical stewardship. Americans need to learn how to live within their means and avoid debt, including their mortgage. Our prayer is to see a steady increase in the number of God’s children become 100% debt free by connecting them to different ministries. Bart Nill with Crown Financial Ministries and Matt Schoenfeld of Abundant Life Ministries play an active role in helping InSight’s customers move towards financial freedom. InSight Mortgage Group’s foundational principals are based on biblical principles taught by Kingdom Advisors, an organization that equips the Christian financial professional as well as an Integrity Resource Center. Kingdom Advisors is a ministry teaching business that shows leaders how to walk out their faith in the marketplace with integrity and accountability. Email michele@wantinsight.com or call 913-642-3334 for more information.

Michele "MAC" Cole
michele@wantinsight.com
913-642-3334